Wednesday August 28, 2024
HOA foreclosures and evictions are often misunderstood. Financial difficulties can occur to anyone, and when these happen to residents within a homeowners association (HOA) community, the unfortunate outcomes can include foreclosing on a home and evictions. In general, foreclosures occur as a legal process when a homeowner is unable to make their monthly mortgage payments, causing them to lose their rights to the property. HOA evictions, however, include removing occupants from the property, who are typically tenants rather than the landlord or homeowner. For both cases, there are a lot of misconceptions regarding if an HOA can do either of these. In this piece, you can explore and better understand foreclosures, evictions, and all vital information on each process when they occur in an HOA community.The role of HOAs in your community
HOA members take on various roles, but they usually serve in one of four key roles: president, vice president, secretary, or treasurer. Being president comes with many hats; you serve the role of parliamentarian, volunteer booster, liaison, meeting facilitator, leader, collaborator, student, and peer all at once. Not to mention, they also establish committees and committee chairs within the board. A vice president bears almost the same responsibilities, as they must be ready to take leadership when the president is absent. As in many other establishments, the secretary handles all communication, documentation, and board meetings, while the treasurer manages the community's finances, including but not limited to budgeting, billing, and expenditures.Due to the many tasks board members manage in their communities, the work of an association has a powerful impact. They help common areas stay well-maintained, as well as make sure rules are followed and all finances are managed responsibly. If you have ever questioned why HOAs wield such authority, it is because of the meaningful responsibilities they have. Not only are they tasked with sustaining property value, but they also serve to maintain order and keep the community successful and stable despite any challenges.
Additionally, the power of an HOA stems from the legal authority derive from through documents like the Declaration of Covenants, Conditions, and Restrictions (CCR&Rs). These outline all homeowners' rights and responsibilities and empower HOAs to enforce those rules and collect assessments.
While sometimes they are viewed as overly authoritative, their primary goal is to protect the interests and well-being of the community. By setting and enforcing rules, HOAs strive to maintain property values, ensure a desirable living environment, and promote a strong sense of community.
What is HOA foreclosure?
HOAs collect fees and assessments from homeowners, typically collected monthly, but this range can vary depending on the community. These fees fund various expenses for the residence, such as maintenance and repair. Once an individual signs to live in a community with the presence of an association, their signature also agrees with taking responsibility for their dues and following guidelines. When a homeowner fails to pay the HOA fees and dues or comply with the rules and regulations, the association may undergo its specific process of foreclosure towards that property. With this procedure, HOAs are allowed to try and recover the outstanding dues and fees, usually through the sale of the property. The steps in initiating foreclosure can differ depending on state laws and association governing documents. Once a notice is sent to the homeowner, they are informed of the overdue fees and are provided opportunities to remedy the issue on many occasions. If the homeowner still fails to comply, the HOA has the option to initiate proceedings.It is important to note that an HOA can foreclose a home, but the process does take various steps; this often involves the association placing a lien on your property, preventing you from selling or refinancing the home until you pay the lien in question. They may seek legal proceedings, potentially including a lawsuit, based on the detailed rules governing the association. When an HOA forecloses on a property, the homeowner forfeits ownership and is required to vacate the property. The property is usually sold to a new owner, who then becomes responsible for complying with the HOA’s rules and paying the dues, and the sale proceeds are used to satisfy the outstanding debt owed to the HOA.
FAQs about HOA foreclosure
Can an HOA evict homeowners?
In short, an HOA cannot evict a homeowner. However, they could instead enact an HOA foreclosure. If this process begins, the homeowner will have no option but to leave the premises, as the property will no longer be under their name. To achieve this, they place a lien on the property, which generally takes priority over other existing liens, including the mortgage—except for the first mortgage, if it was recorded before the lien. If your home has a lien, the HOA will not be responsible for paying your mortgage, so you must continue paying your lender. Once the HOA moves to foreclose on your home, mortgage payments may be halted.In addition to non-payments, an HOA has the authority to take action against a homeowner under many circumstances, repeated violations of the community’s rules and regulations, for example:
- Loud behavior
- Inappropriate use of common areas
- Unlawful activities
- Harming other residents
Can an HOA evict tenants?
In this specific case, the answer is no— HOAs cannot evict tenants in any scenario, including eviction for not paying the dues or fees. Once the homeowner rents their property to someone else, they become responsible for the tenant’s actions, including those of violating rules and regulations. Therefore, if a tenant does not follow those guidelines, the HOA has no authority to evict them; the homeowner does.Still, the HOA can do the same procedures discussed earlier and place a lien on the homeowner’s property, potentially leading to an HOA foreclosure.
If you are interested in renting your property, it is recommended that you draft comprehensive lease agreements that include a section explaining the community’s HOA and its rules and regulations. This can help tenants better understand their responsibilities and abide by these rules throughout their time at the residence.
Protecting your home from foreclosure and eviction
There are steps you can take to safeguard your home and mitigate the chances of undergoing a foreclosure and eviction. Those steps include:- Be responsible for your fee due dates and payments. Whether you are a homeowner or a tenant, this should be at the top of your priority list. After all, these fees help your community stay maintained and conserve property value, which will bring you benefits in return no matter what!
- If you do find yourself having any disagreements with the association, make sure to take adequate action to resolve these issues. Frequently, all it will take is some form of communication to establish what needs to be done in the first place to mend the situation. Having this type of relationship with your community can help, especially in the future.
- Seeking legal advice is also vital, as this will allow for a better understanding of your rights and much guidance during any homeownership process you go through. They can provide advice on negotiating payment plans, requesting loan modifications, or any other alternatives.
To learn how FirstService Residential can support your community's vision, contact a member of our team.